Incisive Research: French selectors eye property instead of bonds

Fund selectors in France are hoping to up exposure to expert property and hedge fund managers in 2012 as disenchantment with domestic bonds and fixed income becomes apparent.

These findings are based on the responses of 69 French fund selectors working mainly in retail and private banks, asset management and life companies who participated in a study produced by Incisive Strategy, the research division of Incisive Media.

More than a third (34%) of respondents have over €10bn of assets under management and a quarter of have over €1bn.

These selectors could be an important source of investment for European fund managers in 2012: half (52%) of respondents said their clients hold €1 billion in third party funds sold by their institutions and 42% expect this to increase in the next 12 months.

French fund selectors are keenest on increasing exposure to property with 46% hoping to achieve this in the next 12 months. At present only half of French fund selectors are allocating to the asset class. Hedge funds also proved popular with 40% of selectors expecting to increase exposure to the asset class and just 19% intending to decrease it.

By contrast domestic bonds/fixed income could be set for outflows with 14% of fund selectors expecting to decrease their exposure to it and just 11% to increase.

Selectors were more ambivalent about equities although on the whole they are planning to increase exposure to it. Nearly a quarter (24%) said they would increase allocations to both domestic and foreign equities while 16% said they would reduce exposure to domestic equities and 15% to foreign equities.

The majority of the fund selection process is carried out in-house in France with just 6% turning to investment consultants for fund selection or monitoring services for some asset classes.

In the fund selection process only 40% of selectors said they would require a three year track record, of which 81% said they would overlook this requirement if a manager already had a proven track record elsewhere. Over a fifth (22%) said a minimum track was not necessary.